By Adam Sturman (Additional editing by Leandra Bernstein)
It seems as if some in Congress got the message. Several days ago I posted a warning on the transfer of tens of trillions of dollars worth of derivatives contracts from Merill Lynch on to Bank of America. This is exactly the kind of illegal action that would be forbidden with the reenactment of Glass-Steagall (H.R. 1489).
Yesterday, a letter sent by Rep. Brad Miller (D-NC) and Sen. Sherrod Brown (D-OH), seems to indicate that a few in Congress have realized that the proposed transfer of $50-75 TRILLION dollars worth of derivatives from Merill-Lynch, to the FDIC insured (and teetering on collapse) Bank of America, may not be such a good idea.
Quoting from their press release: "Regulators must stop treating transactions like this as a private matter," Rep. Miller said. "This kind of transaction raises many issues of obvious public concern. If the bank subsidiary failed, innocent taxpayers could end up paying off "exotic" derivatives."
"If banks are going to gamble, they should do it with their own money," Sen. Brown said. "Ending 'too big to fail' means that depositors and taxpayers are not asked to cover Wall Street's losses. It's time to put an end once and for all to taxpayer-funded bailouts of reckless banks."
“First, was the transfer reviewed under section 23A of the Federal Reserve Act, and if not, why not? The section limits transactions between non-bank and bank affiliates to protect the safety and soundness of banks and to avoid effectively subsidizing high-risk transactions with deposit insurance. Because of the favored treatment of derivative contracts in receivership, it appears highly likely that losses on derivatives would result in losses to insured deposits ultimately borne by taxpayers.” [ED- emphasis added], said the letter, sent to Tim Geithner and to the other members of the FSOC (Financial Stability Oversight Council).
While this is all very useful, and does reflect a certain level of understanding, it is, by no means, enough.
As LaRouchePAC has now thoroughly documented, not only has Obama continued his Nero-like rampage to consolidate dictatorial powers by an act of his will, but after weeks of worthless negotiations in Europe regarding the “bailouts,” we should remember that great financial-monetary crisis can end in dictatorship and world-war.
After all, who is going to enforce the settlement of the multi-quadrillion valuation, in U.S. Dollars, of outstanding derivatives contacts?
Two emergency crisis actions must be taken. First, Barack Obama must be removed from the office of the President; two, Glass-Steagall (H.R.1489) must immediately be installed.
We owe it to ourselves, and the world, to prevent another Hilter dictatorship.
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